Hanson – Market Commentary October 2014

This market commentary has been produced by the Investment Management team at Hanson Asset Management.

Over the years October has become something of a troubled month for markets and this year was no exception. Equity markets suffered their heaviest sell-offs of the year as volatility returned with a vengeance and bond markets also gyrated up and down. In the US, the 10 year Treasury saw its yield slide below 2% before ending the month at 2.31%. This “risk off” approach to life was fuelled by a number of concerns for investors. With the exception of the UK and US there is a distinct lack of economic growth in the world, particularly in the Eurozone (EZ), as Germany looks to be heading for another quarter of negative growth, Italy is contracting and forecasts for France and Spain have been reduced. Deflation is now a growing concern in the Eurozone and the falling oil price will not help. The IMF has recently stated that there is a 40% chance of the EZ falling back into recession. Furthermore, the US has ended Quantitative Easing (QE) as promised, so there will be less liquidity available. The spread of Ebola is also a constant threat, though some progress is being reported and the few cases in the US appear to have been controlled. Consequently the IMF has cut its forecast for economic growth in sub-Saharan Africa to 5.0% from 5.5% as a result of Ebola.

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